Uber Settles Two Class Actions for $100M

SAN FRANCISCO (CN) – Uber drivers in California and Massachusetts will get up to $100 million under a proposed settlement announced late Thursday, but they will remain independent contractors. Drivers will also be allowed to place signs in their cars telling riders: “tips are not included, they are not required, but they would be appreciated.” According to the 42-page settlement motion, Uber will no longer be able to “deactivate” drivers without cause, or for low acceptance rates. The ride-hailing service must also give drivers at least two warnings, a written explanation with reasons for any deactivation, and an appeals process comprising a panel of top-rated drivers for certain types of deactivation. Drivers unsatisfied with the appeals process can arbitrate with Uber at the company’s expense. Uber will also be required to form a drivers association, through which drivers can bring their concerns to management. An initial $84 million is a guaranteed payment under the deal, and an additional $16 million is contingent upon whether Uber goes public or its valuation increases one and a half times from the company’s December 2015 valuation. “We believe these to be very significant changes that will improve work conditions for Uber drivers,” said Shannon Liss-Riordan, lawyer for the drivers, in a statement. “While this case has been pending, we have heard many complaints from drivers about being deactivated without good cause and frustrations about pay issues that they have not been able to get addressed by Uber management.” Uber CEO Travis Kalanick addressed the new deactivation policy in a blog post, writing, “As we’ve grown we’ve gotten a lot right — but certainly not everything. This new deactivation policy is an important step forward when it comes to working with drivers.” Kalanick added that he is pleased that drivers will remain independent contractors as “Drivers value their independence — the freedom to push a button rather than punch a clock.” The settlement, if approved by a federal judge, will resolve two major class actions against the mobile ride-hailing company. Those cases, O’Connor v. Uber and Yucesoy v. Uber, cover roughly 385,000 drivers in California and Massachusetts. Both class actions accused Uber of withholding tips and misclassifying drivers as independent contractors while controlling them like employees. The O’Connor case was scheduled for a jury trial in June, though the Ninth Circuit was set to hear arguments on whether the class of 250,000 drivers should lose certification. The class also risked the federal appeals court forcing them into arbitration. Liss-Riordan acknowledged those risks, saying that even if the Ninth Circuit agreed with rulings in the class’ favor at the district court level, the case faced an uphill battle with the pro-arbitration U.S. Supreme Court. “Thus, if we had not settled, there were some serious risks that all we have fought for – and have achieved – could be taken away. We balanced this risk in deciding what would be a fair resolution of this case,” she said. The drivers’ attorney added, “We realize that some will be disappointed not to see this case go to trial in June. We were looking forward to this trial. But we believe the settlement we have been able to negotiate for Uber drivers throughout California and Massachusetts provides significant benefits – both monetary and non-monetary – that will improve the work lives of the drivers and justifies this compromise result.” Liss-Riordan said the litigation served as a “stern warning to companies who play fast and loose with classifying their workforce as independent contractors, who do not receive the benefits of the wage laws and other employee protections.”